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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Total Fixed Costs (TFC)
Substitute Goods
Determinants of Demand
Complementary Goods
2. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Price Elasticity of Supply
Public goods
Short run
Positive externality
3. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Monopoly
Complementary Goods
Law of Increasing Costs
4. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Average Variable Cost (AVC)
Comparative Advantage
Fixed inputs
Total Revenue
5. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Oligopoly
Market power
Profit Maximizing Resource Employment
Opportunity Cost
6. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Producer surplus
Necessity
Income Effect
Economic Growth
7. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Profit Maximizing Resource Employment
Decreasing Cost industry
Excise Tax
8. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Dead Weight Loss
Excess Capacity
Constrained Utility Maximization
Relative Prices
9. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Relative Prices
Marginal Analysis
Law of Diminishing Marginal Utility
10. AVC = TVC/Q
Average Variable Cost (AVC)
Free-Rider Problem
Shutdown Point
Demand for Labor
11. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Total Revenue
Inferior Goods
Natural Monopoly
12. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Profit Maximizing Resource Employment
Spillover benefits
Average Total Cost (ATC)
13. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Productive Efficiency
Opportunity Cost
Law of Increasing Costs
Monopoly long-run equilibrium
14. The sum of consumer surplus and producer surplus
Price elasticity
Four-firm concentration ratio
Total Welfare
Price Ceiling
15. The practice of selling essentially the same good to different groups of consumers at different prices
Average Total Cost (ATC)
Scarcity
Price discrimination
Relative Prices
16. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Marginal Cost (MC)
Determinants of elasticity
Marginal Revenue Product (MRP)
Diseconomies of Scale
17. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Oligopoly
Resources
Price inelastic demand
18. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Average Variable Cost (AVC)
Law of Supply
Producer surplus
Determinants of Supply
19. Exists at the point where the quantity supplied equals the quantity demanded
Unit elastic demand
Market Equilibrium
Shortage
Marginal Revenue Product (MRP)
20. AFC = TFC/Q
Total Fixed Costs (TFC)
Increasing Cost Industry
Economies of Scale
Average Fixed Cost (AFC)
21. The most desirable alternative given up as the result of a decision
Accounting Profit
Producer surplus
Total variable costs (TVC)
Opportunity Cost
22. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Law of Supply
Price inelastic demand
Spillover benefits
Scarcity
23. Es = (%dQs) / (%dPrice)
Determinants of elasticity
Private goods
Price Elasticity of Supply
Determinants of Supply
24. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Excise Tax
Constrained Utility Maximization
Price Ceiling
25. Ed < 1
Producer surplus
Price inelastic demand
Price floor
Resources
26. Costs that change with the level of output. If output is zero - so are TVCs.
Perfectly elastic
Law of Increasing Costs
Incidence of Tax
Total variable costs (TVC)
27. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Price elasticity
Implicit costs
Constrained Utility Maximization
Cross-Price Elasticity of Demand
28. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Total Revenue
Absolute prices
Absolute Advantage
Law of Increasing Costs
29. The output where ATC is minimized and economic profit is zero
Complementary Goods
Break-even Point
Luxury
Scarcity
30. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Law of Demand
Incidence of Tax
Complementary Goods
Private goods
31. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Price elasticity
Unit elastic demand
Oligopoly
Price floor
32. All firms maximize profit by producing where MR = MC
Unit elastic demand
Shutdown Point
Spillover costs
Profit Maximizing Rule
33. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Average Fixed Cost (AFC)
Determinants of Labor Demand
Specialization
34. A good for which higher income increases demand
Average Total Cost (ATC)
Market Economy (Capitalism)
Normal Goods
Accounting Profit
35. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Allocative Efficiency
Cross-Price Elasticity of Demand
Shortage
Negative externality
36. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Allocative Efficiency
Average Product of Labor (APL)
Resources
Absolute Advantage
37. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Absolute prices
Monopolistic competition
Marginal Cost (MC)
Constant cost industry
38. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfect competition
Variable inputs
Determinants of elasticity
Shutdown Point
39. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Perfectly elastic
Economics
Law of Diminishing Marginal Utility
Short run
40. Total product divided by labor employed. APL = TPL/L
Average Product of Labor (APL)
Total Welfare
Excise Tax
Monopsonist
41. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Surplus
Income Effect
Absolute prices
Substitution Effect
42. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Non-collusive oligopoly
Marginal Analysis
Excise Tax
Free-Rider Problem
43. The price of a good measured in units of currency
Cartel
Monopolistic competition long-run equilibrium
Average Variable Cost (AVC)
Absolute prices
44. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Economic Growth
Productive Efficiency
Least-Cost Rule
45. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Monopoly long-run equilibrium
Necessity
Perfectly competitive long-run equilibrium
Scarcity
46. The ability to set the price above the perfectly competitive level
Market power
Total Welfare
Specialization
Collusive oligopoly
47. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Complementary Goods
Price inelastic demand
Spillover costs
Non-collusive oligopoly
48. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Determinants of elasticity
Economic Profit
Law of Demand
Diseconomies of Scale
49. Ed = (%dQd)/(%dP). Ignore negative sign
Four-firm concentration ratio
Substitute Goods
Normal Profit
Price elasticity
50. The rational decision maker chooses an action if MB = MC
Implicit costs
Price elasticity
Determinants of Labor Demand
Marginal Analysis